When it comes to operating systems for computers, Microsoft holds the vast majority of the market even when there are free alternatives like Linux. However, when it comes to mobile operating systems for smartphones, Microsoft isn’t nearly as strong.

WMPoweruser reports that Microsoft's Windows Mobile operating system is in third place behind Symbian and RIM. Microsoft is looking to gain some market share in the smartphone arena though and is saying that it will increase spending on the mobile OS.

Microsoft reportedly spends $900 million per year and devotes 2,000 employees to its Windows Mobile OS, but the mobile operating system is still what Microsoft terms a "somewhat unprofitable" business. Microsoft CEO Steve Ballmer said in a keynote at Mobile World Congress that Windows Mobile 7 would be coming next year.

Ballmer also stated that Microsoft would not be entering into the phone market and preferred the licensing model it currently uses. That means any Zune fans hoping to see a Zune phone challenge the iPhone will be unhappy.

Ballmer also said in the keynote that Microsoft has plans to extend revenue-making opportunities to services. Ballmer also touched on other things during his keynote and mentioned that the software giant was prevented from bundling Live services with PCs running Windows because of a Consent Decree resulting from a decade old antitrust ruling.

At MWC 2009, Microsoft did announce Windows Mobile 6.5 and Ballmer did say that the expansion of the smartphone segment into the whole phone segment should help Windows Mobile to grow despite the poor economy. Many consumers are opting for smartphones that can serve more than one purpose during the slow economy, leading to continued growth.

Microsoft sees Windows and Windows Mobile as two sides of the same coin according to Ballmer and going forward the two operating systems will share even more technology. Specifically, features like the browser, presentation surface, and possibly the kernel will be shared.

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